How to use a spending diary to cut down on your monthly expenses

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If you have read any of our blog posts before, you’ll know that we’re big fans of budgeting, being thrifty and just generally keeping a close eye on our pennies. So this month we thought we’d look at a simple but effective way to keep track of your spending and keep your outgoings down: a spending diary.

Let us know if this sounds familiar: after a long week at work, you’ve checked your bank balance at the weekend and thought, ‘Wow! How did I spend that much this week? All I did was pop out to grab some lunch!’ Or, despite a good chunk of money gone from your account at the end of the week, you can’t work out where it went or how you spent it. The important thing to remember is that you’re not alone.

With contactless cards, Apple Pay and online shopping that saves your payment details, it’s never been easier to spend money without even thinking about it. Gone are the days when you’d listen to the cashier tell you the total and then count out your money. Now you can scan your own food, tap your bank card and leave the shop without even clocking how much it comes to. And while that’s great for efficiency and convenience, but it’s pretty bad for helping you save.

So, what is a spending diary?

A spending diary is the perfect antidote to the quick, mindless spending that eats into all of our budgets. And best of all, it’s super simple to do. All you’ve got to do is get a pen and paper, open a note on your phone or download a spending diary app (there are lots available for iOS and Android) and keep note of everythingthat you spend every day. And when we say everything, we mean everything. Put 50p into a cake sale donation box at work? Write it down. Bought a coffee on the way into the office? Write it down. Grabbed a packet of chewing gum before that important meeting? You guessed it, write it down.

If you can, keep it all written down and broken up like this:

It’s an especially good idea to keep a note of why you spent that money. This can help you spot habits that lead to spending money or work out ways to help reduce your spending. For example, if you spend £4 a day on lunch because you don’t have time to pack a lunch in the morning, you might realise that getting up 10 minutes earlier every day or meal-prepping on Sunday afternoons can save you £80 a month, that’s £960 a year.

When should you use your spending diary?

Every. Single. Day! This sounds like a massive commitment, we know. But it’s not. After a while, jotting down the amount you spent on your phone becomes second nature and you forget you’re even doing it and it’ll become a habit.

What if I overspend?

This is a really interesting question because it’s not uncommon for people to avoid writing down expenses that they feel a little bit embarrassed or ashamed about. But remember, a spending diary isn’t a test at school. You’re not going to get graded on your spending and nobody’s judging you. It’s really just a tool that you can use to help you make more informed decisions about your money, your saving and your spending. And when we talk about making informed money decisions, we don’t just mean that you’re going to sit down and say ‘oh, I shouldn’t have bought that top’ or ‘I shouldn’t have gone for lunch’. That’s an old-fashioned and counter-intuitive approach to saving. A spending diary is a more mindful, less guilt-ridden approach to saving. Or, in other words, a way of saving that doesn’t feel like a chore. Instead, you’ll be able to say ‘I bought that top because I had been having a rough week’ or ‘I went for lunch because it’s important to see my friends’.

These spending habits don’t just reveal what you spend money on, but the things that are important to you. And that means that you can say ‘well, I could go without takeaway coffees, but I couldn’t go without seeing my friends’ and decide to save money and cut back your spending without giving up the things that are important to you.

So, do you use a spending diary to keep an eye on your spending, or have you got another method to keep the pennies in order? Let us know in the comments!